Fiat-backed stablecoins are those that are backed by fiat currency such as dollars, euros, or pounds. You can buy stablecoins with dollars (or any other fiat currency) and then redeem them for your original currency. The fiat currency backing a stablecoin is frequently referred to as the token. Tether USD, for example, is linked to the US dollar, whereas Tether EUR is linked to the Euro.

Stablecoins backed by fiat currency aim for small price fluctuations in comparison to their reserve currency. They are the most widely used type of stablecoin.